Observer "Lietuva"

WEEK 23rd

Saturday, 5th of June

May was not successful for brewers
Lithuania's beer market grew by 1.9 percent to 90.61 million litres in the first five months of 2004, compared with the same period last year, according to data released by the Lithuanian Brewers' Association.
In May, the country's nine major breweries, which are members of the association, posted an 8.4 percent year-on-year drop in total domestic sales, to 21.56 million litres of beer.
Lietuvos Zinios

Beer war has been preconditioned by prices
Next week, trade centres of VP Market chain will cease trading in the products of the Lithuania’s largest brewery Svyturys-Utenos Alus. Heads of VP Market claim that they have cancelled the agreement with the brewery due to the harmful activities of Tomas Kucinskas, head of Svyturys-Utenos Alus, directed against VP Market.
The CEO of VP Market Ignas Staskevicius and the heads of the brewery met on Friday but they found no compromise. The corporative affairs director of BBH for the Baltic countries Saulius Galadauskas told LZ that the solutions and the steps made by VP Market are inadequate to the reasons that they announce. He supposes that thus the retail trade chain tries to frighten other insubordinate suppliers.
Norfa trade chain is also dissatisfied with the actions of Svyturys-Utenos Alus brewery. The retail trade chain appealed to the Competition Council last October against the brewery: according to the traders, the brewery abused its dominating market position.
A board member of Norfos Mazmena Dainius Dundulis said the trade chain will not revise its contracts with suppliers for now.
Galadauskas claims that VP Market might have started implementing its plan to replace high quality Lithuanian goods with cheaper imported products.
Lietuvos Zinios, Lietuvos Rytas, Respublika

Russia promises to let in Lithuanian milk and meat but it wants guarantees of European Commission
Russia will lift restrictions imposed on import of Lithuanian milk and meat only provided that the European Commission guarantees that Russia’s requirements will be taken into consideration.
Lithuania’s minister of foreign affairs Antanas Valionis claims that the European Commission is already drafting a letter to Russia, where it will be guaranteed that the export certificate issued in any of the European Union’s countries is valid in all the European Union. The letter should be sent in the nearest future.
Presumably, upon receiving the letter Russia will lift the restrictions imposed on import of milk, meat and other animal-origin products from Lithuania and other new members of the European Union. Unless the problem is solved soon, the actions of Russia, as the future member of the World Trade Organisation, would be inconceivable and would oppose all the norms of behaviour of WTO members.
Kauno Diena, Lietuvos Rytas, Lietuvos Zinios

Friday, 4th of June

Appetite of Nordea in Lithuania grows
Nordea Bank Lietuva has announced that it is going to take over a part of assets, rights and liabilities of Lithuanian branch of Polish Kredyt Bank (KB). The bank will expand the chain in the biggest Lithuania’s cities.
The completion of transaction will leave Nordea Bank Lietuva with customer service centres in Vilnius, Kaunas, Klaipeda and Panevezys. The deal is expected to be wrapped up by the end of summer.
KB depositors and loan recipients will be offered to choose the services of Nordea Bank Lietuva. Jaunius Marinskas, head of the Customer Care Department of Nordea Bank Lietuva, claims that they will not suffer any expenses related to the changing of the bank.
Steen T. Nielsen, CEO of Nordea Bank Lietuva, says the bank’s appetite has not been satisfied yet and it will look for new possibilities of growth.
Verslo Zinios, Lietuvos Rytas, Respublika

Lithuanian gardeners are ousted from stores
Lithuanian vegetable growers accuse the biggest trade centres of renouncing high quality local production and exchanging it to cheap imported vegetables. Traders reject the accusations and claim that the goods assortment is preconditioned by the buyers’ wishes. They claim that the buyers purchase similar amounts of Lithuanian and imported vegetables.
Gediminas Mork?nas, head of Pagiriu Siltnamiai (Pagiriai Greenhouses) company, claims that based on the agreement, the biggest retail trade chain in the Baltic countries VP Market was supposed to purchase 328 tons of vegetables from the company, however, only 119 tons of vegetables have been purchased. Other retail trade chains are also purchasing smaller amounts of production.
Gediminas Ruksa, director of Kietaviskiu Gausa (Kietaviskes Plenty) company complains that producers have been compelled to reduce the prices to the minimum.
Lietuvos Zinios

Fight of business giants
Ignas Staskevicius, CEO of the biggest retail trade chain in the Baltic countries VP Market, claims that according to their sources, Tomas Kucinskas, head of Svyturys-Utenos Alus brewery, tried to create a big alliance against VP Market, which should have included suppliers, politicians and mass media. Starting Monday, products of Svyturys and Utenos Alus – beer, mineral water and cider – will not be available in the stores of VP Market chain. Brewers claim that these sanctions demonstrate the trade chain’s wish “to scare other suppliers”, while the heads of VP Market hope for reaction of Carlsberg, which controls Svyturys-Utenos Alus brewery.
According to Staskevicius, they want to know whether the actions of Kucinskas have been coordinated with the heads of Carlsberg and if it turns out that it is the position of BBH, then the trade chain will permanently suspend trade in the products of this brewery.
Kucinskas calls the accusations of VP Market’s head absurd. He plans to return to Lithuania from vacations already on Friday and to discuss the problem with Staskevicius.
Respublika, Lietuvos Rytas

Thursday, 3rd of June

Lithuania’s economy will grow the fastest in EU
PricewaterhouseCoopers, an international accounting and consulting firm, forecasts that growth in the new EU member states will remain above the EU's average this year. Lithuania is expected to remain the fastest growing economy in Europe.
In its latest European Economic Outlook, PricewaterhouseCoopers forecasts that consumer spending, investment and export growth will remain buoyant in Lithuania in the coming years, although GDP growth may moderate somewhat to around 6.5 percent in 2004 and 6 percent in 2005.
Still, this would be the highest GDP growth rate among the EU member states and Western European countries outside the European Union. Lithuania's economy expanded by 9 percent last year, achieving the fastest growth in the European Union.
Kauno Diena, Verslo Zinios, Lietuvos Rytas

Meat and milk export to Russia got stuck
The producers of Lithuania and other new members of the European Union from June 1 can no longer export meat, dairy, or other products of animal origin to Russia. "Russia does not admit the EU veterinary quality certificates that are issued to Lithuanian enterprises and provide access to the markets of the union," Jolita Maciulyte deputy director of the Lithuanian State Food and Veterinary Service reported.
In the negotiations with the European Commission, Russia is insisting that those countries exporting meat products have the bloc's common veterinary certificates. Lithuania and Russia previously applied bilateral agreements concerning exports of such products.
Lina Viltrakiene, acting head of the foreign trade policy division in the Lithuanian Foreign Ministry, said that talks regarding the veterinary agreement with Russia were still taking place. Blocking the entry of animal products from the new member states of the European bloc could therefore be "temporary pressure" by Russia.
Some exporters said they had not heard anything about the Russian ban. However, representatives of Rokiskio Suris and Pieno Zvaigzdes, Lithuania's largest diary groups, confirmed they could suffer losses if the problem was not solved soon.
Verslo Zinios, Lietuvos Rytas

VP Market will import alcohol
VP Market, operator of the biggest retail trade chain in the Baltic countries, has started importing strong alcohol beverages. The head of the company Ignas Staskevicius says they have decided to undertake import of alcohol beverages due to more liberal import procedure and liquidation of exclusive terms. Besides, a 10 percent import excise has been lifted since Lithuania joined the European Union.
VP Market has received the first consignments of alcohol beverages from Belgium and France. Brandy, whiskey and other alcohol beverages of various brands should be available in VP Market’s trade centres soon.
Staskevicius says the imported alcohol drinks will be sold only in the stores of the chain. He adds that VP Market does not plan to compete with the alcohol wholesalers. According to Staskevicius, prices of strong alcohol beverages will reduce soon.
Lietuvos Rytas, Verslo Zinios

Wednesday, 2nd of June

Loaning fever does not subside
The aggregate assets of ten Lithuanian commercial banks and two foreign bank branches reached LTL 22.709 billion at the end of April, a rise of 6.3 percent since the end of 2003, the Bank of Lithuania has announced.
According to the report, the commercial banks' combined loan portfolio grew by 10.7 percent to LTL12.924 billion during the four months. The total volume of bank deposits increased by 4.8 percent to LTL 14.035 billion, of which private individuals' deposits were up 5.5 percent to LTL 8.255 billion.
Loans issued to residents increased by 23.8 percent in four months and stood at LTL 2.923 billion. Hansabankas and Vilniaus Bankas had issued the biggest amounts of loans as of late April: LTL 841.3 million and LTL 550.6 million respectively.
Hansabankas controlled 28.8 percent and Vilniaus Bankas – 18.8 percent of the housing loan market.
Lietuvos Zinios, Respublika

Japanese business giant discovered Lithuania
The Japanese trade and investment giant, the corporation Mitsui & Co, Ltd is considering a possibility to open its agency in Vilnius. This would be the first step of the concern to the Baltic market. The Japanese businessmen are interested in the chemistry and plastics industry of Lithuania. They are also attracted by a possibility to invest in a factory in Klaipeda free economy zone.
The Japanese businessmen have been meeting with the heads of the previously chosen Lithuanian companies to discuss the possible cooperation this week.
If the negotiations are successful, cargos from Japan to the consortium’s agencies in Moscow and Kiev would be transported through the Lithuanian port.
The annual turnover of the Japanese consortium constitutes USD 10 billion.
Lietuvos Rytas

Small traders demand for their share
Small traders propose to limit the working hours of the biggest trade centres on weekdays, weekends and holidays. Businessmen of Panevezys region have addressed the parliamentary Economy Committee with such a request. The committee supports the businessmen’s initiative and plans to address the Government and request it to reconsider this issue.
Kazys Grabys, the chairman of Panevezys Businessmen‘s Association, claims that such measures are necessary in order to protect interests of small businesspeople in small towns.
Gediminas Zizys, director of the Lithuanian Trade Companies’ Association, proposes the authorities to take into consideration the consumers’ expectations first of all. In his opinion, people have gotten used to shopping in trade centres on weekends and the consumers’ needs and their opinion should be taken into consideration. Zizys remarks that in the European Union countries, such restrictions are not imposed on business in order to activate economic development.
Kauno Diena

Tuesday, 1st of June

Energy company will invest in Northern Bridge project
Lietuvos Energija (Lithuanian Energy), the state-run power transmission company, ruled to wire up to the project on merging of Baltic and Finnish energy systems on Monday.
Company's investments into the project code-named Northern Energy Bridge should reach approximately LTL 93 million, which will leave the company in control of 25 percent of joint venture.
Rymantas Juozaitis, Lietuvos Energija CEO, says that Lithuanian energy is expected to reach Scandinavian market in 2005, with the country expecting to export approximately 500 million kilowatt-hours (kWh) of electricity per year.
Last year the company exported 7.5 billion kWh of Lithuanian energy, a rise of 10.3 percent from 2002.
Lietuvos Zinios

VP Market has big plans
VP Market, the largest retail chain in the Baltic countries, will open its first outlet of household goods chain Ermitazas in Lithuania this year.
Ermitazas would offer building materials, leisure goods, household appliances and utensils, Ignas Staskevicius, VP Market CEO, said at Monday's news conference.
The first Ermitazas' outlet will be opened in Vilnius, in the annex to the trade and entertainment centre Akropolis. Further on, the group will establish Ermitazas centres at other shopping and leisure centres Akropolis due to emerge at other Lithuania's cities
VP Market is considering expansion in Ukraine and Russia.
VP Market achieved total sales of LTL 1.28 billion in Lithuania, Latvia and Estonia in the first quarter of this year, a rise of 18.5 percent year-on-year.
Lietuvos Rytas

Goal of Kesko Food and Rimi – a joint company
Kesko Food, a member of the Finnish concern Kesko group, and the Swedish company ICA, which controls the retail trade chain Color Rimi, are negotiating on cooperation in the Baltic food market. It is planned to complete the negotiations by the end of 2004.
Last December, Kesko Food and ICA signed a record of intent to establish a new company in the Baltic market by summer 2004. Kesko Food and ICA are to control 50 percent stakes in the new company each.
In December, Kesko Food and ICA said that the goal of the new company is to boost its share from 15 percent to 25 percent in the Baltic food market and to take the leading position in the market. The company should have started operating in summer 2004.
In Lithuania, ICA controlled a logistics centre in Vilnius and 33 trade centres, most of them operating under RIMI brand, at the end of the last year. The turnover of Rimi Lietuva for 2003 stood at LTL 407.4 million, a 7.4 percent decline year-on-year.
Kesko Food does not operate in Lithuania yet but a subsidiary of Kesko, Rautakesko, controls the household goods and construction materials chain Senukai and Kesko Agro company.
Verslo Zinios, Lietuvos Rytas

Monday, 31st of May

Profit of Lietuvos Gelezinkeliai increased
State owned railway operator Lietuvos Gelezinkeliai reported a turnover of LTL 251.7 million, an increase of 19.2 percent year-on-year, and its pre-tax profit climbed 8.5 percent to LTL 55.8 million.
The increase in fright haulage had the biggest impact on the improvement of the operational results of Lietuvos Gelezinkeliai in the first quarter. The total volume of freight transported grew 9.2 percent. The volume of international freight went up 9.9 percent.
The company invested LTL 54.1 million in the first quarter of this year, i.e. 2.1 times more if compared to the first quarter of 2003.

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